As the Union Budget 2026–27 approaches, India’s natural rubber sector presents a paradox that policymakers can no longer ignore. Budgetary allocations for the Rubber Board have steadily increased over the past five years—from ₹190 crore in 2021–22 to ₹360.31 crore in 2025–26—and are complemented by the National Rubber Policy introduced in 2019, which explicitly sought to increase productivity through improved agro-management, systematic replanting, and higher farm incomes. However, despite this sustained fiscal support and policy intent, outcomes on the ground six years later remain deeply concerning.

Productivity Slips Despite Policy Push

Despite increased budget allocations and a clear policy roadmap, India’s average rubber productivity has declined—from 1,629 kg per hectare in 2013–14 to 1,485 kg per hectare in 2023–24. As a result, domestic production (supply) continues to fall short of domestic demand, with nearly 30–35 per cent of consumption still met through imports, according to data from the Rubber Board of India. This gap persists even though India possesses sufficient agro-climatic potential to meet its own requirements.

The modest increase in overall output from 774,000 tonnes in 2013-14 to 857,000 tonnes in 2023-24 has not come from traditional rubber-producing strongholds such as Kerala and Tamil Nadu, but from the Northeast—driven by income-guarantee schemes backed by state governments and tyre manufacturers’ associations. This model, while effective locally, is not a substitute for nationwide structural reform.

Kerala’s Decline Signals Deeper Distress

Kerala, India’s largest natural rubber producer, illustrates the crisis sharply. Its share in national production has fallen from around 84 per cent in 2013–14 to about 71 per cent in 2023–24. Productivity in the state dropped from 1,695 kg/ha to 1,573 kg/ha over the same period, while its share in total area under rubber declined from 70 per cent to 61 per cent, as per Agriculture Statistics at a Glance.

Field evidence suggests that 30–35 per cent of rubber-growing land remains untapped or poorly utilised, as farmers abandon tapping or delay replanting due to weak returns on investments, which in turn has contributed to visible trade consequences.  

Rising Imports

As per the Rubber Board of India, India’s natural rubber exports have declined from 5,398 tonnes in 2013–14 to 4,199 tonnes in 2023–24, while export value has also fallen from ₹85.22 crore to ₹55.10 crore. In contrast, imports have surged—from 360,263 tonnes to 528,677 tonnes during the same period—pushing the import bill up from ₹55,373 million to ₹75,142 million. The result is growing import dependence, even as domestic capacity lies idle.

Price Competitiveness and Trade Policy

While international rubber prices have remained competitive over the years, domestic production costs have risen steeply, driven by high wages, statutory labour benefits, and acute labour shortages. For large growers, labour and its related benefit costs account for nearly 65 per cent of total production expenses, unlike smallholders who are not subject to the same obligations. As profit margins shrink, farmers are increasingly abandoning tapping, neglecting replantation, or even exiting rubber cultivation altogether, according to the IIM Kozhikode report on the plantation sector.

Rubber produced outside ASEAN countries is increasingly routed through ASEAN members to take advantage of free trade benefits, bypassing import duties despite not meeting rules-of-origin requirements and allowing Indian manufacturers to access cheaper raw materials from abroad. While replantation subsidies exist, they are modest and exclude large planters/farmers, limiting their overall impact.

From Policy Intent to Measurable Outcome

As the Union Budget 2026–27 approaches, it is evident that India’s rubber sector demands a comprehensive structural reset. Incremental allocations alone will not revive the sector. What is required is a production-centric approach that ensures no viable rubber area remains untapped. Targeted incentives for bringing abandoned plantations back into production must be prioritised.

Mechanisation, particularly in the tapping process, represents another critical reform lever. International experience—most notably from Malaysia—shows that mechanised tapping can reduce input costs by around 20 per cent while easing acute labour shortages. Scaling such technologies in India would not only ease chronic labour shortages but also significantly reduce production costs, enhancing the global price competitiveness of domestic rubber.

Equally important is promoting large-scale crop diversification and intercropping—not just pineapple, but a wider range of compatible crops—to stabilise incomes, improve soil health, and reduce farmers’ exposure to price volatility inherent in monocropping systems. However, existing legal restrictions on crop diversification in large plantations have led to widespread underutilisation of land. Amending state laws to permit flexible and market-responsive cropping choices is essential to improving per-unit returns on land and unlocking the sector’s untapped productive potential.

Finally, sustained investment in research and development must underpin all reform efforts. Accelerating the adoption of high-yielding and genetically improved rubber varieties will be central to strengthening India’s competitiveness against leading rubber-producing nations. Together, legal reform, mechanisation, and technological upgrading can reposition the rubber sector from a stagnating plantation system into a resilient and future-ready driver of rural growth.

Banisha Begum Shaikh, Senior Associate, Research & Projects, at the Centre for Public Policy Research (CPPR), Kochi, Kerala, India.

Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research (CPPR).

Banisha Begum Shaikh

Senior Associate, Research & Projects at CPPR | [email protected] |  + postsBio

With over 5 years of experience as a research professional, Banisha Begum Shaikh specializes in conducting in-depth sectoral evaluation at both national & state level policy research, policy drafting, white paper development, advocacy, implementation and impact assessment across various sectors of the economy.

Banisha's past research work has reached the policy makers desks at central & state levels with several suggestions being reflected in key policy and regulatory reforms.

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